Managed Services Success Still a Big Challenge

Rex Frank is well acquainted with the pitfalls of adopting the model. Having worked at Alvaka Networks in Irvine, Calif., one of the solution provider pioneers of the managed services model, Frank joined Northwest Computer Support in Tukwila, Wash., about a year ago as vice president of managed services.

His mission was to whip the solution provider’s struggling nascent managed services practice into shape. Managed services now generates more than $60,000 a month for Northwest Computer Support, versus about $15,000 Frank started.

To accomplish that, Frank embarked on a three-pronged campaign to get the sales staff, the managed services team and the field engineers up to speed.

The sales staff, he says, lacked confidence in the model and worried that their compensation would suffer as the company pushed fixed-fee contracts as opposed to charging per sale or per project. So Frank spent hours talking sales reps through the model, accompanying them on sales calls and adjusting the compensation plan to build more incentives into managed services sales while reducing commissions on traditional sales.

Much of the sales staff training, he says, revolved around setting the right expectations to customers to make sure that reps didn’t try to sell services that hadn’t been set up yet.

“I was very clear with the sales department on what we can deliver now versus what we can deliver in the future,” Frank recalls.

Whatever they promised to clients, the sales reps wanted to be sure the services would actually work, so Frank also spent a lot of time with the managed services technical team. First the team went to work on setting up processes for handling customer trouble tickets based on severity.

Creating repeatable processes is crucial to a successful managed service, as MSPs will attest. “You have to have a process for everything,” says Sponsler. “If you don’t do it the same way every time, you’re reinventing the wheel every time.”

Frank then turned his team’s attention to which alerts to set up for which situations. This was another area for which Northwest Computer Support still hadn’t cracked the code. “I would say we spent nearly 100 hours just tuning the alerting system,” he says.

With the ticketing process and alert system under control, Frank turned his attention to the services Northwest Computer Support was delivering to customers, first data backup, then system patches and, finally, desktop management. For each of those services, processes were created and documented so that they would become established and repeatable.

Frank says that once the staff realized how processes and documentation bettered their lives, it became easier to get buy-in as more services were introduced.

Meanwhile, Frank worked with the field engineers to make the adjustment to the new way of doing business.

Field engineers, especially high-level staff, tend to enjoy the status their work affords them with customers, who see them as heroes for solving their technical problems. With site visits reduced as a result of RMM, the work of the technical staff changes.

Some, says Sponsler, simply don’t adjust. “We have a couple of guys who said, ‘I can’t do this,’ and they left the company,” he says.

Despite the challenges, providers that have successfully adopted the managed services model say it was a wise strategic move, especially as the economy stalls. While clients put off capital expenditures, spending on managed services is expected to grow in 2009. A recent study by the Computing Technology Industry Association (CompTIA) found more than one-half of MSPs surveyed expect growth of 25 percent or more.